SAN FRANCISCO -- California's drought-ravaged reservoirs are running so low that state water deliveries to metropolitan areas have all but stopped, and cutbacks are forcing growers to fallow fields. But 19th century laws allow almost 4,000 companies, farms and others to use an unmonitored amount of water for free -- and, in some cases, sell what they don't need.
With grandfathered legal rights, this group, dominated by big corporations and agricultural concerns, reports using trillions of gallons of water each year, according to a review by The Associated Press. Together, they have more than half of all claims on waterways in California.
However, the state doesn't know if any are overdrawing or wasting water. The AP found the state's system is based on self-reported, incomplete records riddled with errors and years out of date.
"We really don't know how much water they've actually diverted," said Bob Rinker, a manager in the State Water Resources Control Board's water rights division.
With a burgeoning population and projections of heightened climate-related impacts on snowpack and other water supplies, the antiquated system blunts California's ability to move water where it's most needed.
When gold miners flocked to the West in the 1800s, the state drafted laws that rewarded those who first staked claims on the region's abundant rivers and streams. Today, California still relies on that honor system.
The system's inequities are particularly evident in the arid Central Valley.
Near Yuba City, second-generation rice farmer Al Montna has been forced to idle 1,800 acres because of scarce water. About 35 miles north, however, fourth-generation Butte County rice farmer Josh Sheppard had more than enough water, thanks to superior rights to Feather River water dating to the late 1800s.
"No one thinks of it when there's ample water and plenty to go around, but in these times of tightness it is a very contentious resource that gets fought over," Sheppard said, standing next to his flooded fields.
To find out how many entities hold these superior rights and how much water they use, the AP obtained the water board's database for 2010 -- the last complete year of water usage reports -- and interviewed state officials and dozens of landowners.
The state collects the records every three years on a staggered basis, meaning its information is always out of date.
Tom Howard, the state water board's executive director, acknowledged the state should get a better handle on water use. But he rejected any suggestions that special rights granted under the system should be ended.
"People have made investments based on promises in the existing system. Towns grew up and land was developed based on promises of a secure water supply," he said. "Do we strand those investments to start over?"
More than half of the 3,897 entities with active senior and riparian rights to water are corporations, such as the state's biggest utility, PG&E, which creates hydroelectric power, and the Hearst Corp., which has water rights for its remote, Bavarian-style forest compound called Wyntoon. Also among the biggest rights holders are government agencies such as the water departments of San Francisco and Los Angeles.
San Francisco, whose water rights date to 1902 when its mayor nailed a handwritten notice on a tree, also uses free Sierra Nevada water to generate power for its airport, schools and firehouses.
This year, the state cut water deliveries to farmers and cities by 95 percent, and the federal government also imposed sharp restrictions on its water customers. But companies, farmers and cities with water rights that predate 1914 were exempt this year from mandatory cuts, even though they collectively are the biggest water users in the state.
The AP independently verified that just 24 of the rights holders reported using more than twice the volume of water that California's vast system of state and federal dams and aqueducts ships to cities and farms in an average year.
As summer looms, some water scientists question the utility of conservation efforts that do not restrict consumption by most water users with old rights. "Obviously, senior water rights holders have the most to benefit from the current system," said Peter Gleick, director of the nonpartisan Pacific Institute.
Those with century-old rights say the system works well because it provides a reliable supply of water. And in a drought, the state lets some of them sell any extra water at the market rate.
The water board does not require monitoring or meters for users whose rights date back a century or more, or who have rights to draw from a waterway adjoining their land. And rights holders have successfully defeated legal and legislative efforts to strengthen California's oversight, said Andy Sawyer, a board attorney.
California made progress toward accountability in 2009, when a new law required rights holders to report their water use and gave the board limited power to punish them. But the water board doesn't have the staff to systematically check even obvious mistakes in the records, said Aaron Miller, a board senior engineer.
Nonetheless, he said, the state uses this inaccurate data to make decisions about when to grant new water permits.